Analyst Note| Joshua Aguilar |
Wide-moat-rated 3M came up short relative to what we originally earmarked in the third quarter. We lower our fair value estimate to $187 from $195 previously. The driver of the fair value decrease was our midcycle margin assumption, primarily due to 3M’s safety and industrial segment, but also due to margin headwinds in its transportation and electronics segment. Management certainly struck an optimistic tone on the company’s long-term trajectory and its ability to deliver strong growth, margins, and cash conversion, and that the firm will eventually get past these headwinds.